Whar is liquidity?



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Describe liquidity

3 Answer(s)


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Liquidity describes the degree to which an asset or security can be quickly bought or sold in the market without affecting the asset's price.

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In business, economics or investment, market liquidity is a market's ability to facilitate the purchase or sale of an asset without causing drastic change in the asset's price.

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Liquidity measure how easily you can convert your asset into cash.

For example if you have a Gold, the you can easily convert it into cash , but suppose you have a Home and you want to sell it then it is very difficult to sell it immediately.

So in this case Gold is more liquid than the Home.